State insurance office defends whistle-blower’s removal

The hearings officer who decides contested insurance cases files a whistle-blower complaint alleging improper coercion from an official in the Office of the Insurance Commissioner; a day later she is removed from her job. The insurance office says there was no connection; others aren’t sure.

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A hearings officer has filed a whistle-blower complaint alleging the chief deputy to Insurance Commissioner Mike Kreidler tried to improperly influence her on cases. But that’s not why she was removed from hearing cases, Kreidler’s office said Monday.

Chief presiding officer Patricia Petersen, in the midst of an intensely contested case, was removed from her position and was placed on paid leave last week because of a “separate personnel matter which we cannot speak to at this time,” said Stephanie Marquis, spokeswoman for the Office of the Insurance Commissioner (OIC).

The day before her removal Wednesday, Petersen filed a whistle-blower complaint with the Washington state Auditor’s Office alleging that OIC Chief Deputy Commissioner Jim Odiorne had violated state law by attempting to influence her on cases before her. She checked the box for “gross mismanagement” in her complaint,

She also filed a notice of communications by Odiorne in a case now before her involving several insurers and Seattle Children’s hospital, which is seeking an order requiring the insurers to include the medical center in their provider networks. A June 9 hearing date was set in that case, but the legal wrangling could delay a decision in an issue crucial to health insurance being offered under the Affordable Care Act.

Petersen, who has been the OIC’s chief presiding officer for 19 years, and decided contested cases for nine years before that, is supposed to independently evaluate cases that come before her.

Although she is an employee of the OIC, she is essentially a judge. And like a judge, she is required to conform to rules involving conversations or communications with one side or the other in such cases. Such “ex parte” communications are illegal and must be disclosed, Petersen said in a filing in the Seattle Children’s case.

In the past year, many of the cases before Petersen have grown increasingly contentious and high-profile, particularly those involving decisions as to whether insurers’ networks are adequate, and Kreidler’s role in that issue has increasingly come under fire.

Insurers are seeking to pare networks to keep costs down, while providers such as Seattle Children’s argue that insurers cannot deliver promised care without including them.

If the OIC does not approve of an insurer’s network, the insurer cannot sell plans in this state, either on the Washington Healthplanfinder marketplace exchange or in the outside market.

And Petersen is at the center of it all.

Regarding the law governing ex parte communication, said Marquis, the OIC disagrees with her interpretation. It does not prohibit communications with employees who are not involved in the cases, she said, so conversations with Odiorne are allowed. “He is her direct supervisor; he speaks with her regularly,” she said.

Petersen made a point of noting that Kreidler has never attempted to influence her on cases. In fact, she said, no agency official in her 28 years with the OIC had ever attempted to do so before now.

In the past, her decisions in cases have never figured into evaluations of her work performance, she wrote in the whistle-blower complaint, “nor have I ever received any other form of influence which would jeopardize my impartiality as the final decision maker in these contested hearings.”

But beginning in September, she wrote, Odiorne began pressuring her to decide cases the way Kreidler wanted.

And, she said, as her direct supervisor, he made it clear that he would evaluate her on whether her decisions support the commissioner's position. “Mr. Odiorne is clearly threatening my job if I do not enter decisions in these cases which support the Commissioner’s position,” Peterson wrote in the complaint.

Her decisions are appealed directly to Superior Court; Petersen said in her 10-page complaint she had never been overturned on appeal.

During a pre-conference hearing in the network case last week, Michael Madden, the lawyer for Seattle Children’s, said he had received an anonymous copy of the whistle-blower complaint that Petersen filed the day before.

The lawyer sent the complaint to the other lawyers, who agreed that they would have to discuss whether to ask that Petersen remove herself from the case. They called such a communication “unprecedented,” and one questioned whether Petersen herself or someone in the OIC had sent the copy. The rules for ex parte communication apply to her, as well.

Madden noted that Seattle Children’s did not want to lose its hearing date. “I lay no fault at your feet,” he told Petersen. “But if as a result of actions by members of the Insurance Commissioner’s staff, we are deprived of a timely hearing and a remedy, I think we will have been deprived of due process.”

Just who sent that whistle-blower complaint anonymously from an Olympia Office Depot is now the subject of much investigation.

Jim Brownell, whistle-blower program manager for the state Auditor’s Office, said the possibility that a copy of the complaint was sent by an auditor’s staff member has been investigated. “Visually, it was very evident it wasn’t from our shop,” he said. “I’m very confident of that.”

Greg Devereaux, executive director of the Washington Federation of State Employees, has helped advise Petersen. She invited him to a meeting with Odiorne a few weeks ago, he said, but he was not allowed to attend and was escorted out of the building.

“I believe [the OIC] is trying to influence cases,” he said. “I don’t think by any stretch of the imagination is that appropriate.” He said Petersen told him she did not send the copy of the complaint, and that he has reason to believe her.

The auditor has 15 working days to decide whether to investigate the complaint.

Meanwhile, Marquis said the OIC will be conducting an “internal investigation” of Petersen’s allegations.

“We do take ex parte communications very seriously, and the law that governs them,” she said.

Information in this article, originally published May 19, 2014, was corrected May 20, 2014. A previous version of this story incorrectly stated that a copy of a hearings officer’s whistle-blower’s complaint had been faxed to a lawyer in a case before her. The copy had actually been emailed anonymously from an Olympia Office Depot account..